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The management of KC Company is considering the purchase of a $27.000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year usetul life, it will have zero scrap value. The company's required rate of return is 12%. Determine the net present value of the investment in the machine. Table A-3 Present Value Interest Factors for One Dollar Discounted at k Percent for 2% % 12% 0.9091 0.9009 0.8929 Period 1% 3% 0.9709 4% 6% 0.9524 0.94340.9346 0.9259 09070 0.8900 8734 0.8573 0.3638 0.8396 0163 0.7629 9% 09174 08417 0.7722 0.7350 0.7084 8% 10% 11% 13% 0.8850 0.7831 0901 0.9804 0.9615 0.9803 0.9012 0.9426 0.9246 0.824 08116 0.7972 0.7312 0.7110 0.6587 0.9706 0.9423 0.9151 0.8890 0.7938 0.7513 0.6931 0.8227 0.7921 0.7473 0.7130 4 0.9610 0.9238 0.8885 0.8548 0.6830 0.6356 0.6133 0.9515 0.9067 0.426 0.8219 0.7835 0.6806 0.6499 0.6209 0.6935 0.5674 0.5428 O 30.917.8 none of the choices O 30.458.65 O 293526

The management of KC Company is considering the purchase of a $27.000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year usetul life, it will have zero scrap value. The company's required rate of return is 12%. Determine the net present value of the investment in the machine. Table A-3 Present Value Interest Factors for One Dollar Discounted at k Percent for 2% % 12% 0.9091 0.9009 0.8929 Period 1% 3% 0.9709 4% 6% 0.9524 0.94340.9346 0.9259 09070 0.8900 8734 0.8573 0.3638 0.8396 0163 0.7629 9% 09174 08417 0.7722 0.7350 0.7084 8% 10% 11% 13% 0.8850 0.7831 0901 0.9804 0.9615 0.9803 0.9012 0.9426 0.9246 0.824 08116 0.7972 0.7312 0.7110 0.6587 0.9706 0.9423 0.9151 0.8890 0.7938 0.7513 0.6931 0.8227 0.7921 0.7473 0.7130 4 0.9610 0.9238 0.8885 0.8548 0.6830 0.6356 0.6133 0.9515 0.9067 0.426 0.8219 0.7835 0.6806 0.6499 0.6209 0.6935 0.5674 0.5428 O 30.917.8 none of the choices O 30.458.65 O 293526

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The management of KC Company is considering the purchase of a $27.000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year useful life, it will have zero scrap value. The company's required rate of return is 12%. Determine the net present value of the investment in the machine. Table A-3 Present Value Interest Factors for One Dollar Discounted at k Percent for 11% 0.9091 0.9009 0.8929 Period 1% 2% 3% 4% 6% 8% 10% 12% 13% 0.8850 0.7831 0.9615 09174 0.8417 0.7722 0.7350 0.7084 0901 0.9804 0.9709 0.9524 0.9434 09346 0.9259 0.890008734 0.8573 2 3 0.9803 0.9612 0.9426 0.9246 0.9070 0.8264 0.8116 0.7972 0.9706 0.9423 0.9151 0.3638 0.8396 0.163 0.7938 0.7513 0.7312 0.7118 0.6931 08227 0.7629 0.7921 0.7473 0.7130 4 0.9610 0.9238 0.8885 0.8548 0.6830 0.6587 0.6355 0.6133 0.9515 0.9057 0.426 0.8219 0.7835 0.6806 0.6499 0.6209 0.6935 0.5674 0.5428 O 30.9178 none of the choices O 30.458.65 O 29.3526
Transcribed Image Text:The management of KC Company is considering the purchase of a $27.000 machine that would reduce operating costs by $7,000 per year. At the end of the machine's five-year useful life, it will have zero scrap value. The company's required rate of return is 12%. Determine the net present value of the investment in the machine. Table A-3 Present Value Interest Factors for One Dollar Discounted at k Percent for 11% 0.9091 0.9009 0.8929 Period 1% 2% 3% 4% 6% 8% 10% 12% 13% 0.8850 0.7831 0.9615 09174 0.8417 0.7722 0.7350 0.7084 0901 0.9804 0.9709 0.9524 0.9434 09346 0.9259 0.890008734 0.8573 2 3 0.9803 0.9612 0.9426 0.9246 0.9070 0.8264 0.8116 0.7972 0.9706 0.9423 0.9151 0.3638 0.8396 0.163 0.7938 0.7513 0.7312 0.7118 0.6931 08227 0.7629 0.7921 0.7473 0.7130 4 0.9610 0.9238 0.8885 0.8548 0.6830 0.6587 0.6355 0.6133 0.9515 0.9057 0.426 0.8219 0.7835 0.6806 0.6499 0.6209 0.6935 0.5674 0.5428 O 30.9178 none of the choices O 30.458.65 O 29.3526
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